The unprecedented damage caused by the recent storms in Gauteng and KwaZulu-Natal is likely to drive up premiums, according to the South African Insurance Association.
Insurance risks manager at the association, Nico Esterhuizen said that insurers have seen a number of claims not only from Gauteng, but also from surrounding provinces such as the Free State and Mpumalanga due to the recent storms.
Speaking to 702’s Kieno Kammies, Esterhuizen said it was still too soon to say how much damage was caused by the storm in KZN – however, the damage could be further exacerbated with the eThekwini Municipality on Thursday warning Durban residents of two more approaching cold fronts.
When this kind of widespread damage occurs, most insurance companies take out what they call a ‘reinsurance policy’ from international companies to relieve pressure, Esterhuizen said.
“Usually the local insurance companies will approach international markets to buy a reinsurance,” he said. “These reinsurance are spread all over the world and share in the risk that the South African market is experiencing.”
This will have a knock-on effect he said, and there is now a high possibility that consumers might see an increase in premiums for insurance policies in the near future.
“If a certain area has experienced more claims and there is high probability that it’s gong to recur, you will probably see an increase on your policy,” he said. “It all depends on where you live and how frequently you have experienced these storms.”
Esterhuizen said it was difficult to point to a specific number for a potential increase. “It could be 1% or 2%, or it could be as high as 15%,” he said.